26 May 2011

The ‘Short Term Lending’ market has been flourishing recently. Specifically geared at speedily arranged loans, normally with a monthly rate of interest and pre-agreed with an ‘exit’ route, the term ‘Bridging Finance’ is quickly becoming a household name.

With many lenders in the market, offering loans up to 75% of the property value (sometimes higher with additional security offered) these types of loan are calculated and charged on a daily/monthly basis, with some even offering to roll up the interest (no monthly payment). Interest rates start from 0.75% per month and normally are arranged over a period of between 1 to 18 months. Most will carry a lender fee, an assessment fee, some will include early repayment charges and possibly an exit fee. However, for the right scenario, these loans provide a superb funding line.

Ideal scenarios for Bridging Finance include –

1) Refurbishment – allows you to buy and refurbish property quicklyA loan to support with the purchase of a property and then undertake the refurbishment before it is eventually presented to a mortgage company or bank for long term re-mortgage finance, or sold.

2) Purchasing properties at auctionShort Term Loans can be arranged very quickly and can be ideal where there are tight deadlines to meet. A typical 28 day completion from purchasing an auction property is usually easily achievable. A pre-auction valuation is considered a must.

3) Funding under value purchasesA loan based on the actual value of a property and not the purchase price. Thus, when purchasing a property, under value, you may have the ability to borrow up to 90%of the cost of a property (subject to valuation) and then re-finance the transaction using a traditional lender later on.

4) Chain breaking or not sold your property yetWhen the chain breaks or you have not sold your property but found one you have fallen in love with, bridging finance may enable you to complete on the purchase before you have sold your existing home.

These are just some examples, there are many others.

However, where there are positives, there can be negatives! Many lenders have set a minimum term for a property to be owned before they will allow a remortgage to occur. This is usually six months. So please ensure this is factored in to any purchase, budget calculations, etc before committing to any Short Term Funding/Bridging Finance. For more information, or to discuss a specific scenario, please contact AToM.

20 May 2011

The ‘Property Today’ box outside AToM ran out of property papers by Monday lunchtime this week! A new record! And with my neighbours selling their property within three weeks of going on sale, I could be accused of being overly positive about public interest in the current property market, despite what the national press are reporting!

One of the mortgage trade magazines (Mortgage Strategy) this week has revealed that they are aware that 11 new lending institutions have applied to the FSA for authorisation to lend, over the past 12 months. Great news and this shows an increasing appetite to lend. However, with the regulators indicating that they will make a decision within 12 months of receiving an application, some of these new lender opportunities could be a way off just yet!

Inflation has risen to 4.5% for April, from 4% in March, state the Office of National Statistics. Easter and the numerous Bank Holidays had a significant impact. Although, this probably won’t have an impact on the Bank of England Base rate with any rise unlikely to occur until November at the earliest, reports an economist for Cebr. Who knows!?

I’ve mentioned this before, but its back on the radar. Many dormant lenders are offering customers a discount of up to 30% off their mortgage to move away. If your current lender is one of these (not actively lending), then it’s worth a call to see if you qualify for a discount. Normally, they will give you a deadline in which to complete the transfer of your mortgage but I’m sure it’s a timescale that AToM could meet!

And finally, remember that financial institutions evaluate your mortgage application based on your credit history. In fact, every financial outlay you have, or have had, may be reported upon. Most institutions will use either Experian or Equifax to review your financial status. If you have too much credit, not enough credit, or missed payments on any credit or utilities (including Gas bills or Mobile phones), you may find that mortgage availability to you could be limited.

12 May 2011

I start this week’s column with superb news for First Time Buyers who have a 5% deposit! Two lenders have launched 95% mortgages over the last few days. It’s been some time since we’ve seen a true 5% deposit product with an affordable rate of interest (sub 6%) and low arrangement fees. Although the lenders are not actively promoting these products, they are available through certain mortgage intermediaries and will undoubtedly have limited funding availability. So be quick!

This does show a positive attitude from the lenders and an apparent appetite to lend. Although these products may only be ‘testing the water’ and will be extremely difficult to get through, I hope this is the start of the return of some normality to an under funded first time buyer market.

The Halifax House Price index has suggested that house prices dropped by 1.4% in April, compared to March. This is following Nationwide’s suggestion earlier in the month that prices for April had decreased by 0.2%. Despite the two indexes differing in amounts, they do come to the same conclusion that prices had dropped. This puts pressure on the Bank of England to keep the base rate on hold, which, in turn, is good news for those on tracker rate mortgages.

The number of mortgage products available in the market rose by 13% in April up to 11,748 according to an analysis by Mortgage Brain. This is nearly 7,000 more products than at the same time last year. Fixed rate product offerings rose by 16%, cementing their position as the most popular product type.

Whatever your particular need, do talk to an independent mortgage advisor who has access to all lenders in the marketplace rather than a limited panel or single provider.

Finally, AToM has been heavily involved in a local initiative called Set4Success which is due to launch shortly. Working in partnership with Horsham District Council, Horsham Rotary Club, Horsham Schools and local businesses, Set4Success will assist Horsham District’s young sportspeople with funding for training and competing. To find out more or to see how you can get involved, visit www.set4success.org

05 May 2011

There has been an influx of lenders joining the intermediary mortgage market recently. Having previously been solely ‘business to consumer’, these lenders are now establishing that there is value in offering their products via a wider audience and gaining a better exposure in a large, but somewhat strained, intermediary marketplace.

Although these lenders are not household names, they do have some superb product offerings and by distributing these products via intermediaries, the consumer has access to products they may not have been aware of otherwise.

Some lenders have chosen limited, or exclusive, distribution. For example, the Chorley Building Society, based in the north, has chosen AToM to exclusively distribute a product that caters for borrowing up to 85% of the property value right up to a maximum loan size of £1m. This is a rare opportunity as not many lenders will lend that high in the current climate. Others, including Precise Mortgages are choosing to solely distribute their products (aimed at those who have minor credit issues) through the intermediary sector, and AToM is one of their limited approved distributors! Mortgage Trust recently re-launched into the Buy to Let market, solely through intermediaries.

Metro Bank, Post Office and the oncoming launch of Tesco mortgages later in the year are likely to remain customer facing only. Which is fine for the right type of consumer. However, like most banks and building societies, you will only receive advice on their own products and not any others available in the market place. So although you may get a great deal on ‘club card’ points, there’s really no substitute for advice and recommendation from someone who can review the whole of market and cater to your exact requirements. Don’t you just wish they would stick to what they are good at rather than trying to take over the whole world?!

Finally, I am delighted to announce that AToM has been voted ‘Best Mortgage Packager’ for a second year running in the national MyIntroducer.com awards 2011. This is a great achievement and is in recognition of the hard working team we have at AToM.